Correlation Between Sun Life and Wilton Resources
Can any of the company-specific risk be diversified away by investing in both Sun Life and Wilton Resources at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Sun Life and Wilton Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sun Life Financial and Wilton Resources, you can compare the effects of market volatilities on Sun Life and Wilton Resources and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Sun Life with a short position of Wilton Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sun Life and Wilton Resources.
Diversification Opportunities for Sun Life and Wilton Resources
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sun and Wilton is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Sun Life Financial and Wilton Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wilton Resources and Sun Life is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Sun Life Financial are associated (or correlated) with Wilton Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wilton Resources has no effect on the direction of Sun Life i.e., Sun Life and Wilton Resources go up and down completely randomly.
Pair Corralation between Sun Life and Wilton Resources
Considering the 90-day investment horizon Sun Life is expected to generate 3.61 times less return on investment than Wilton Resources. But when comparing it to its historical volatility, Sun Life Financial is 4.74 times less risky than Wilton Resources. It trades about 0.07 of its potential returns per unit of risk. Wilton Resources is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 48.00 in Wilton Resources on November 2, 2024 and sell it today you would earn a total of 8.00 from holding Wilton Resources or generate 16.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 96.26% |
| Values | Daily Returns |
Sun Life Financial vs. Wilton Resources
Performance |
| Timeline |
| Sun Life Financial |
| Wilton Resources |
Sun Life and Wilton Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sun Life and Wilton Resources
The main advantage of trading using opposite Sun Life and Wilton Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sun Life position performs unexpectedly, Wilton Resources can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Wilton Resources will offset losses from the drop in Wilton Resources' long position.| Sun Life vs. Axa Equitable Holdings | Sun Life vs. American International Group | Sun Life vs. Arch Capital Group | Sun Life vs. Old Republic International |
| Wilton Resources vs. Santa Fe Petroleum | Wilton Resources vs. Liberty Energy Corp | Wilton Resources vs. Rodinia Oil Corp | Wilton Resources vs. Mountainview Energy |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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